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PPC pinning hopes on further growth in Zimbabwe

by Mafu Sithabile
09 Nov 2011 at 06:11hrs | Views
Pretoria Portland Cement (PPC) hopes for a "long overdue" recovery in the cement industry, and is also pinning its hopes on further growth in Zimbabwe. The cement manufacturer on Tuesday reported diluted headline earnings of 163.8 cents for the year ended September 2011, from 215.6 cents previously. Its diluted earnings per share declined to 163.3 cents, from 209.8 cents in 2010. Revenue was relatively flat at R6.83 billion, from R6.81 billion earlier.  

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) declined by 14% to R2.15 bln, while operating profit decreased by 19% to R1.67 bln. A final dividend of 95 cents per share was declared, from 130 cents in 2010, bringing the year's total dividend to 130c, from 175cs previously.  

CEO Paul Stuiver said: "The results reflect the difficult conditions experienced by local building and construction industries. Demand in South Africa and Botswana has only recently begun to improve and the only region where we enjoyed growth during the year was Zimbabwe." PPC Zimbabwe's domestic sales improved by more than 50% during the year due to a combination of increased demand and operational problems suffered by competitors.

However, Mr Stuiver said core demand in SA, the primary market, was steady, and that since the fall-off at the end of the Soccer World Cup things had gone from dismal to slightly better. "If it wasn't for the (continuing global) financial crisis, I would be very bullish at this stage," he said.

"Second-tier contractors are reporting quite a lot of work."

Mr Stuiver said apart from the big Medupi and Kusile power projects, and the multibillion-rand De Hoop dam project in Limpopo, government spending had largely not come to the party.

Instead, the market was mostly driven by private-sector spending on projects such as office blocks and shopping centres.

"I think construction sector sentiment is that things have reached bottom, and there are some green shoots in the market," Sibonginkosi Nyanga, equities analyst at broker Imara SP Reid, said yesterday. But improvement would be gradual, based on smaller contracts, and firms would continue to face margin pressures, he said.

PPC said it had managed to reduce overheads, while delivering on strategic projects.

Source - Byo24News
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